3 Best Arbitrage Mutual Funds To Start SIP For 1-3 Years

BNP Paribas Arbitrage Fund

This is a hybrid fund launched by BNP Paribas Mutual Fund. The fund’s expense ratio is 0.31 per cent, which is comparable to the expense ratios charged by most other Arbitrage funds. The fund currently has a -0.04 per cent stock allocation, a 24 per cent debt allocation, and a 76.4 per cent cash allocation. BNP Paribas Arbitrage Fund Direct has a 1-year growth rate of 4.29 per cent. It has returned an average of 6.30 per cent each year since its inception. The financial, metals, healthcare, energy, and technology sectors make up the majority of the fund’s equity holdings. BNP Paribas Overnight Fund – Direct Plan’s top five holdings include UPL Ltd., Tata Steel Ltd., Bharti Airtel Ltd., and Tata Power Co. Ltd.. The fund presently has Rs 757 crore as assets under management (AUM) and a NAV of Rs 13.14 as of June 18, 2021. One can start SIP by Rs 300 and this low-risk fund has an exit load of 0.25% if withdrawn within 1 year.

Nippon India Arbitrage Fund

The fund presently has Rs 11,792 crore in assets under management (AUM) and a NAV of 22.09 as of June 18, 2021. The expense ratio of the fund is 0.34 per cent. The fund now has a 4.8 per cent equity allocation, a 22.9 per cent debt allocation, and a 72.3 per cent cash allocation. The 1-year returns for the Nippon India Arbitrage Fund Direct-Growth are 4.25 per cent. It has had an average yearly return of 7.32 per cent since its inception. The financial, metals, services, healthcare, and energy sectors make up the bulk of the fund’s equity holdings. Reliance Liquidity Fund – Direct Plan, Reserve Bank of India, GOI, Tata Steel Ltd., and Reliance Liquidity Fund – Treasury Plan – Direct Plan are the fund’s top five holdings. One can start SIP by Rs 100 and this low-risk fund has an exit load of 0.25% if withdrawn within 1 year.

Edelweiss Arbitrage Fund

As of June 18, 2021, the fund has Rs 5,503 crore in assets under management (AUM) and a NAV of 15.94. The fund’s expense ratio is 0.34 per cent. The fund presently has an equity allocation of -0.4 per cent, a debt allocation of 32.2 per cent, and a cash allocation of 68.2 per cent. The 1-year returns for Edelweiss Arbitrage Fund Direct-Growth are 4.27 per cent. It has returned an average of 6.91 per cent per year since its inception. The financial, metals, services, energy, and healthcare sectors make up the majority of the fund’s equity holdings. Reserve Bank of India, Adani Ports and Special Economic Zone Ltd., Bharti Airtel Ltd., Vedanta Ltd., and Reliance Industries Ltd. are the fund’s top five holdings. SIP can be started in this fund with Rs 500 and an exit load will be charged 0.1% if redeemed within 1 year.

Best Arbitrage Mutual Fund Returns

Should you invest?

In the near term, arbitrage mutual funds may be quite turbulent. You can minimize this by investing for at least a year to ensure high returns. Because the returns would be categorised as Long Term Capital Gains, which are tax-free up to a ceiling of Rs. 1 lakh, you will receive higher tax-efficient returns than bank fixed deposits. Arbitrage Funds are not subject to the risks as traditional equity investments have. This is due to the fact that they purchase and sell stocks simultaneously. As a result, there is no possibility of stock price fluctuation impacting returns. As we always analyze the past returns for our readers for their better understanding and determination, Arbitrage Mutual Funds have generated an average 3-year SIP returns of 4.6% and 5-year SIP returns of 5.09%, according to Value Research.

If we compare these returns, then it is much higher than the returns of bank fixed deposits as of now. Finally, we suggest that these funds are appropriate for investors who want to gain exposure to the equity market but are concerned about the risk involved. When there is constant volatility in the market, arbitrage funds are a secure choice for risk-averse investors. Arbitrage funds are a good option if you want to generate moderate returns from an investment that has a reasonable mix of debt and equity in a turbulent market.

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